As the world continues to face economic uncertainties, geopolitical tensions, and currency fluctuations, buying in gold can be a wise choice for those seeking a stable and reliable asset. Read our top 10 reasons why 2023 should be the year you buy gold.
- Hedge against inflation
Gold is often considered a hedge against inflation, which means it retains its value during times of economic uncertainty. A cash ISA in comparison may not provide enough return to keep up with inflation, resulting in a loss of purchasing power over time, so you’re not making your money work hard for you!
- Potential for Capital Appreciation
Gold has the potential for capital appreciation, meaning its value may increase over time. The price of gold isnt affected by various economic factors, such as inflation, interest rates, and geopolitical events. Cash ISAs may not provide as much potential for capital appreciation.
Over the last 20 years gold price has increase by +740% - Source: Goldprice.org.
- Scarcity of gold
Gold is a finite resource, and its supply is limited. As a result, the scarcity of gold makes it a highly sought-after commodity, which can drive up its value over time. Unlike paper money or digital currencies, which can be created endlessly, the supply of gold is relatively fixed. This means that as demand for gold grows, its value can increase, making it a valuable asset for those seeking to preserve their wealth. As such, the scarcity of gold is a key factor that contributes to its long-term value and appeal as an investment.
- Physical Ownership, a tangible asset
One of the main advantages of owning gold is that it is a tangible asset, which means that you can physically hold it in your hand. Unlike most other investments that rely on paper certificates or digital records, gold allows you to have direct ownership and control over your investment.
5. No Counter-party Risk
When you buy gold, you do not have to rely on a bank or financial institution to hold your investment. This means that you do not have to worry about counterparty risk, which is the risk that the bank or institution holding your investment may fail or become insolvent.
Did you know your money in your bank is only safe up to £85,000 in a single account? - Read more on our blog
6. Not being subject to Government or Bank Control
Gold is not subject to government or bank control, which means that it cannot be easily manipulated or devalued by these entities. This gives you peace of mind, knowing that your gold is protected from political or economic turmoil.
- Capital Gains Tax and VAT Free options
Some preciously metals offer exemptions from capital gains tax and VAT. This means that any profits you make from selling your gold or silver are not subject to taxation, which can significantly increase your overall returns. Additionally, since gold and silver are not subject to VAT, you can purchase these precious metals without having to pay any additional fees or charges. This can make it easier and more affordable to acquire gold and silver, especially for those who are just starting out.
Gold is a highly liquid asset, meaning that it can be easily bought and sold without incurring significant transaction costs or fees. Compared to real estate, which can take months or even years to sell, gold is a highly liquid asset that can be bought and sold in a matter of days or even hours. With Minted you can exchange your gold into cash in a matter of days!
- Potential returns vs other forms of saving
When comparing against other forms of saving such as a Cash ISA your returns on your savings maybe greater in gold. Below is an illustration comparison of if you saved £200 a month for 10 years in gold, you would have saved £24,000 of your own savings but the value of your wealth by buying gold could be worth £39,744. That's an increase of £15,744. Now let's compare that to a CASH ISA if you saved the same amount the value of your savings would be worth £26,071. Now that's only an increase of £2,071.
- Diversifying where you save your money
For those that are avid investors gold can act as a buffer against losses in other areas of an investment portfolio, and may help to protect against market downturns and recessions.
Gold has a low correlation to other assets like stocks and bonds, which means that adding it to a portfolio can help to diversify risk and reduce overall portfolio volatility.
Disclaimer: this example is intended as an illustration. Precious metals are volatile and values can and fluctuate and positive returns are not guaranteed.